11 Lessons Higher Ed Can Learn from the Private Sector

Higher education leaders who think they’re above their colleagues in the corporate world are missing out on these essential lessons.

“Corporate!” “Profit!” “Business!” These can be despised (or at least disliked) words in higher education circles. After all, we’re not all about the almighty dollar. We don’t step on the little guy to profiteer. We’re noble. We’re mission-driven. Right …? RIGHT?

In truth, being in the private sector doesn’t mean one is automatically a heartless corporate raider focused on personal and shareholder gains. In truth, many companies seek to honestly serve clients and others, with profit being one of several motivations. Your humble authors have sat on both sides of the for-profit / not-for-profit fence. We have found that many of the practices of for-profit organizations can provide valuable lessons to not-for-profit brethren. Below are several examples of these lessons, some operational, some structural and some cultural.

1. Not for profit is a tax designation, not a management strategy.

We’ve all heard the adage “No margin, no mission,” and higher education is not immune. In order to invest in our faculty, students, staff, programs, buildings (you get the picture), we must be good stewards of our financial resources.

This means bringing rigor to financial decision-making at all levels of the organization, with a business discipline as the guiding principle for choosing how to spend our time and money. No university has yet invented the money tree—be sure to protect and invest your institution’s resources wisely.

2. Yes, you do have customers.

Lots of them! Students, faculty, parents, employers, the community … the list goes on. And in a world of essentially instantaneous awareness and feedback, it’s even more critical that you are mindful of all of your stakeholders, both inside and outside the institution. This includes an awareness of each constituent’s motivations, expectations and communication styles. Understand them, work to meet their needs, and talk with them … often.

3. Be careful what you incent people to do.

The incentive systems in higher education are … um, different … than most other sectors (ahem, tenure). But that doesn’t mean you can’t align expectations with behaviors. Align incentives and rewards with expected results. Cultural norms that include clear expectations and outcomes for each employee are critical to success. Equally critical are the mechanisms by which an institution manages those who are noncompliant.

4. Who’s propping you up?

Every organization succeeds as a result of collective effort. Faculty and staff are core to the missions of our institutions. In order to support our knowledge creation, teaching and service missions we must invest in the most talented staff we can afford, and we have to value the people we groom internally as much as those with outside experience.

5. Expect excellence everywhere. Period.

By the simple nature of their orientation toward regular, accountable quantitative results and earnings, corporations can have a reduced tolerance for mediocrity. Mission-driven not-for-profit organizations, however, typically maintain a longer view, anchored on values. This is admirable—we’re in higher education because we agree with this. Our challenges can be as complex as any corporation’s.

So, what’s the downside? Because of longer turn cycles, mission orientation and frequent qualitative measures, higher education organizations can be a hiding place for less motivated employees. That’s not OK. Expect excellence from everyone, even if it takes longer. (Note: expect excellence, not perfection. Perfection is the enemy of great in our view.)

Commitment to mission includes hard work and best efforts always. Work to ensure that across the enterprise. Your results will be that much better.

6. Perfection is the enemy of great.

One of the most wonderful and pervasive characteristics of an educational institution is that it encourages and rewards reflection, inquiry and thorough examination. This trait has led to knowledge creation and breakthroughs for centuries. However, it is not applicable in every meeting and situation. There is value in making the best decision you can make with the information available to you, which has been reviewed and discussed by very talented people. Stop talking it to death. Decide. Move on.

7. Look around. Keep a broader perspective.

Universities are complex, large organizations. In any such entity it is natural for fiefdoms and territoriality to emerge. When someone in the community asks you, “Where do you work?” Do you answer with “I work for the School of XYZ”? Or, do you say, “I work at ABC University”?

While keeping one’s finger on one’s local unit pulse is a good idea, doing so without consistent awareness of the larger organization—its mission, vision and goals—results in myopia, diminished communication, conflict and suboptimal operations. Raise your head and look around. Reach across walls. Keep in mind what is best for the entire organization. And reward both local and broad successes.

8. Beware the fiefdom.

“Rich Department, Poor Department” is an unintended consequence of success and leads to the siloed organizations that are so familiar in our industry. Building on the discussions of incentives, innovation and collective effort above, it is critical to create a culture in which success is celebrated and rewarded.

9. For Pete’s sake, Just Try It!

Universities are heralded as originators of innovation. No doubt this is true, from a scientific and scholarly perspective; faculty make distinguished discoveries every day. Can we really say the same from a business and administration perspective? Does your culture really embrace new ways of doing things? Does it allow for occasional failure, or even disagreement with the status quo?

In many places, these efforts to innovate are squashed, failure is not tolerated, and participants are (passive-aggressively) ostracized. People “go along to get along” and can hide under their desks. Pull them out; encourage them to think differently; support their successes and failures; and avoid “T-Rex arms” (not reaching far enough to innovate or support others).

Improvement requires trying new things. Corporations know that standing still eventually results in being run over. We all can learn from this.

10. Take off the gown; you need the town.

Universities can have both metaphorical ivory towers and ivory walls. We can live in a bubble, comfortable in our intellectual prowess and venting an air of superiority. This can result in a town-gown divide and strained relationships with neighbors and municipalities. Take off the gown and that mortarboard. Truth is, the gown needs the town and vice versa.

Engagement with—no, scratch that—partnership with your neighbors, businesses, counties and cities can yield tremendous benefits to both parties. Communities benefit from shared scholarship, arts and research from the university; universities can benefit from opportunities within the community, such as practical learning experiences or internships among businesses. Corporations learned the benefits of community engagement long ago. Get to know your university neighbors. They have lots to offer.

11. “Remember you are mortal.”

In ancient Rome, when a victorious general was paraded down the roads of the city, a servant sat next to the preening general and repeatedly whispered, “Remember you are mortal.”

This served to ground the general in reality among an outpouring of adulation. So it is with higher education leadership, faculty and staff. We all work to better the human condition, giving us a sense of noble purpose. And we can have spheres of authority, which often is the currency of power in universities. This breeds hubris. Don’t. Just don’t.

Take your work seriously, and yourself not so much. Your accomplishments and tenure at a university, even if measured in decades, are but a voice in a chorus and a blip on the profound and ongoing history of the institution. Remember you are mortal. Kodak once dominated photography; GM once dominated the car business. Both went bankrupt because of transient success and overconfidence.